Changes to U.S. Department of Labor (DOL) overtime rules, which were temporarily halted just prior to implementation late last year, have been ruled invalid by the same federal judge who called a “time out” on their scheduled enactment.
If the new rules had been allowed to take effect, they would have more than doubled the “white collar” salary exemption.
Under the Fair Labor Standards Act (FLSA), most employees in the United States must be paid at least the federal minimum wage for all hours worked and must be paid overtime (one-and-a-half times the employee’s regular rate) for all hours worked in excess of 40 in a work week.
However, the FLSA exempts for certain types of “white collar” workers from mandatory overtime. Employers are not required to comply with minimum wage and overtime obligations for these employees. Typical examples of these workers are executives, administrative employees, outside sales people, and managers.
As it stands, the Fair Labor Standards Act says that salaried employees who earn at least $455 per week ($23,600 per year) do not have to be paid for any overtime hours they work. The Department of Labor’s new regulations would have increased this threshold exemption level to $921 per week ($47,892 annually per year).
If the rules were put into effect it would mean that hundreds of thousands – perhaps millions – of salaried employees would immediately become eligible for overtime pay. This would have dramatically increased payroll costs for thousands of private businesses, as well as state and local governments. Opponents argued the rules would likely have resulted in many layoffs or reduced working hours.
As a result of the court’s ruling the minimum salary level for overtime exempt employees will remain at $455 per week ($23,660 per year). But Secretary of Labor Alex Acosta has requested public comments on the rule and has indicated that the DOL may adjust the salary exemption thresholds.